When some of the world’s largest investment banks help a controversial fund manager make numerous large leveraged bets less than a decade on from his part in an insider trading scheme, questions are bound to crop up. Much has been said about Bill Hwang’s Archegos Capital failing to meet its margin call, which led to banks frantically selling off their positions in a little-known stock called Viacom. However, one crucial issue appears to have been overlooked.

As we now know, Archegos wanted to take large secretive positions in media firm Viacom by using derivatives called total return swaps. But how many of these swap positions are involved in the trading of larger companies, and just how many funds are left holding cash equity positions that act as misdirection to mask trades that are the exact opposite of the position? In other words, a fund manager may own some of the equity in much more renowned stocks such as Microsoft or Tesla and, at the same time, may also be synthetically shorting the same company through total return swaps in order to bet against the stock going in the opposite direction to what the wider market is predicting.